PETER BROOKS. Physicians ‘outed’ on fees – Time for Patients to take more control.

If all [of the above] fail to work perhaps a review of what Pierre Trudeau and his government did in 1984 when they took on a system not dissimilar to ours –uncontrolled fee for service- and legislated that doctors could charge what they liked BUT unless they adhered to the fee negotiated   between the Provincial Government and the profession (on an annual basis) the doctor lost all access to a Medicare reimbursement. This system still works today in Canada and few doctors opt out of it. Now there is a thought- and a significant game changer.  

The lead article in a recent issue of the Medical Journal of Australia could be seen as an interesting reflection of how physicians see their worth in Australian society! (https://www.mja.com.au/journal/2017/206/4/variation-outpatient-consultant-physician-fees-australia-specialty-an state d- -and).

The article looks at data from Medicare generated in 2015 for initial consultations physicians ( specialists ).The overriding finding in this study from Freed and Allen (University of Melbourne) is the variation in fees charged by physicians to patients both between specialties and within specialties as well as between states and territories.

Immunology/allergy was the specialty with the highest median ($270) fee for an initial consultation, followed by neurology (median, $250). Mean fees for an initial consultation were less than $200 in only three of the 11 specialties (medical oncology, nephrology and geriatric medicine), with the lowest mean in geriatric medicine.

The highest median out-of-pocket cost was for an initial consultation for immunology/allergy ($141.70), and the lowest was for geriatric medicine ($58.30).

The variation in the fees charged is very difficult to explain – even more so are the differences within a specialty – when on average doctors are seeing roughly the same range of disease complexity.

Surely it is about time that we demanded that doctors start to justify these fees- and if they cannot the Government and other groups such as the health insurance industry must start persuading them that ‘fee gouging’ and greed will not be tolerated as outlined by Professor Lesley Russell recently in Crikey (https://www.crikey.com.au/2017/02/24/fee-gouging-medical-specialists-must-be-brought-to-heel).

This paper is important as they show for the first time the variation in fees charged to patients when seen in a clinic outside a public hospital. It also comes at a time when there is increasing focus on out of pocket expenses in the health care system –which now total around $23 billion per year and are one of the fastest growing parts of the health care budget (though of course not in the budget or even mentioned by politicians since it is we who pay these fees).Significant interest is being now afforded by private health insurance providers as out of pockets may be becoming a disincentive to take out private insurance. The balance between public and private health delivery would be significantly changed if significant numbers of patients drop their private insurance and use the public system. This issue might also be considered by State Health Departments who actively encourage public hospitals to charge private patients admitted to public beds. From the public hospitals perspective it sounds a good deal – but this example of cost shifting –at which Australia excels – may not be smart in the long term.

Interestingly the issue of out of pocket expenses has usually focussed on general practitioner fees which are really small ‘beer’ in comparison to fees levied by surgeons (often thousands of dollars ) but of course as a one off ( hopefully ) for a surgical procedure.

But back to the fees charged by physicians. In summary the authors found that most specialties bulk-billed between 30 and 42 per cent of visits

The highest rates of bulk-billing were in haematology, 60 per cent, and medical oncology, 53 per cent

The lowest was in geriatric medicine, 17 per cent

Doctors in the Northern Territory bulk-billed 76 per cent of visits, a greater proportion than anywhere else

Bulk-billing rates in New South Wales and South Australia were just above 40 per cent

Western Australia was the only state with a rate below 20 per cent

Within each specialty, the average range of charges varied by over 70 per cent.

Doctors’ fees are always hard to comprehend and have been the subject of previous articles in The Conversation (theconversation.com/how-much-seeing-private-specialists-often-costs-more-than-you). The Medicare rebate is determined by Medicare (85% of which is accepted by the Doctor if they bulk bill. The AMA sets another fee schedule significantly higher than Medicare and the individual practitioner charges what they feel ‘the market ‘can bear. This is most unfair to the patient who has no idea of what an appropriate fee is or even worse what other practitioners charge for the same or equivalent procedure. And of course the doctor provides absolutely no outcome data ( for example what is the success / infection rate of the procedure and the average length of stay ) which might be helpful in deciding who a patient might see let alone pay a significant out of pocket expense Interestingly the focus of out of pockets has to some extent focussed on surgical fees- but if you think about it a gastroenterologist who does 10 endoscopies in a morning and adds $ 400 as an OOP on each is doing pretty well!

Out of pocket expenses (OOPs) have also escaped much media attention and very little comment from government despite a Senate inquiry last year (Report – Parliament of Australia www.aph.gov.au › … › Out-of-pocket costs in Australian healthcare-)

which sadly made few recommendations and non in relation to how doctors should transparently inform patients about the OOPs they are about to incur. And why should the Government comment – after all they ( the Government) pay nothing for OOPs- we ( the people) do and in 2011-2012 a total of $24.3 billion was spent by us (individuals) on health care out of the total health budget of $140.2 billion

The Grattan Institute also reviewed OOPs recently (increase out-of-pocket costs – Grattan Institute  https://grattan.edu.au/…/Grattan_Institute_submission_-_inquiry_on_out-of-pocket_c..)

pointing out there were many better ways of addressing rising health care costs and that OOPs did impact on the most vulnerable in society. So perhaps governments should consider ways of controlling these fees since they should surely be there to protect the citizens from the ‘excesses’ of society-call me naïve.

A recent OECD Report (https://www.oecd.org/…/Health-at-a-Glance-2015-Key-Findings-AUSTRALIA.pdf) showed that in Australia OOPs account for 20% of expenditure on health care , slightly higher than the OECD average of 19%. By contrast, out-of-pocket costs account for only 10% of health spending in the United Kingdom, 13% in New Zealand and 14% in Canada, which have similar government funded health systems. Out-of-pocket costs also comprise a low proportion of health spending in France (7%), whose health system is largely funded by social security. The share of health expenditure made up by out-of-pocket costs increased in Australia by 1% between 2008 and 2012.

The interesting thing about these data on OOPs is the variation between doctors even in a given specialty – we also see this with in practice variations –and again the profession is starting to think about this variation in practice but is still not willing to promote public knowledge of this. This is addressed to some extent in a companion article in the MJA (doi:105694/mja16.01161) By David Hillis et al- Variation in costs of surgery :seeking value . Whilst the Royal Australasian College of Surgeons did make some comments last year against high surgical fees (RACS pledges fee probe – MJA InSight 11, 29 March 2016 doctorportal)

https://www.doctorportal.com.au/mjainsight/2016/11/racs-pledges-fee-probe/) little progress seems to have been made.

So we do have a problem with OOPs. This issue has been around for a while and patients should understand they have a right to question these fees. However it has now come to the point where there is good evidence that OOPs are starting to impact on private health insurance rates and on the ability of patients (particularly those with chronic disease and with lower incomes) to access appropriate care. These two issues alone are likely to impact significantly on the public health system and upset the balance between public and private health care to the detriment of all. Not for the first time will the golden ‘goose ‘ ( an unchecked fee for service payment system ) be sacrificed by those who gain most under the current system – private specialists! And it will hurt everyone – but particularly patients.

What are the options in an environment where under the Australian Constitution Government is unable (easily) to control medical fees.

Well we could change the Constitution- very costly and time consuming (though with a volatile electorate it might just get up). But what might be easier at least in the first instance is government mandated transparency. First Medicare could publish the annual income from Medicare of every doctor in Australia and put it on the web – it is after all our money (the peoples money I mean. It will not tell you how much each doctor earns but it would flag the importance of transparency. Interestingly you can access the www and see what every doctor in the US earns from Medicaid.

Secondly Government could require that for any Medicare item worth/ or billed at  over perhaps over $1500 then reimbursement would only be provided if 3 quotes were submitted! These second opinions could be funded at a lower rate and done as teleconsultations. Wow that would be a circuit breaker – and watch the ACCC sharpen their interest if there was any fee collusion.

Thirdly doctors should be required to provide patients with a written list of ALL out of pocket expenses in a timely manner before the consultation / procedure (watch the anaesthetists complain because in their case it can be a corridor consultation when one is half doped before the procedure!)

Now the professions – Royal Colleges and other professional groups could promote  this themselves- but they have been pretty silent thus far -except for a small foray from the surgeons (RACS). So they need a ‘nudge ‘!.The Royal Australian College of Physicians responded in relation to this recent MJA article that ‘it does not comment on individual fees physicians charge in their own right.’

Surely there is an ethical issue here – the Hippocratic Oath says ‘first do no harm ‘-so what about significant financial harm to patients.

This issue is not going away and we all – doctors, health professionals, governments, health payers (particularly the private health insurance industry ) and most importantly patients need to work together to ensure our health system –which still has some of the best outcomes in the world – continues to perform for ALL Australians – not just those who can afford to pay, and not just for specialists . Thank you Dr Freed for showing us some data!

If all of the above fail to work perhaps a review of what Pierre Trudeau and his government did in 1984 when they took on a system not dissimilar to ours –uncontrolled fee for service- and legislated that doctors could charge what they liked BUT unless they adhered to the fee negotiated   between the Provincial Government and the profession (on an annual basis) the doctor lost all access to a Medicare reimbursement. This system still works today in Canada and few doctors opt out of it. Now there is a thought- and a significant game changer.

Peter Brooks, FRACP Professor Centre for Health Policy , Melbourne School of Population and Global Health.

See also an article by Lesley Russell ‘The impact of private health insurance on equity and access in specialist healthcare’.  And John Menadue ‘Medical specialists – high fees and poor accountability’.

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One Response to PETER BROOKS. Physicians ‘outed’ on fees – Time for Patients to take more control.

  1. Julian says:

    Thank you Professor Brooks for your timely and informative summary. As you say, this is not the first time someone has shone a light on the subject of medical expenses/fees, but your emphasis on OOPs allows us a fresh perspective into what is an otherwise obscure area. This is certainly the case for me as an “ordinary” consumer.

    One matter that particularly interests me is your comment: “The balance between public and private health delivery would be significantly changed if significant numbers of patients drop their private insurance and use the public system.” I was always under the impression that this shift was happening – and likely to increase – because of the overall expense of private health insurance and not just OOPs, though obviously they play a significant part – as you suggest. This being so, one has to wonder just how expensive the private system would be if the annual public subsidy was withdrawn, and what would happen as a consequence.

    Is it simply a matter of ideology that the subsidy continues? Or is it just another example of how we Aussies can bugger up a good idea (universal health cover) with minimal effort?

    However, and given the ongoing possibility of patients dropping their private insurance, why is it that private patients opt for treatment in public hospitals? Is this a growing trend, and what might be the consequences for both private and public systems of health cover? In this context Professor Brooks I note your reference to: “… State Health Departments who actively encourage public hospitals to charge private patients admitted to public beds.” You refer to this practice as “cost shifting” and say that : “…[it] may not be smart in the long term.” In my limited understanding, cost shifting in this context means robbing Peter to pay Paul and so gets us nowhere near addressing the underlying problems.

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